Optimising the Regulatory Environment

It is also pleasing to see that one of the main purposes of your conference is to debate the state of your industry and how it can become more efficient.

Part of that efficiency drive is to look at how industry can optimise the environment provided by the whole of Government – a topic that I will be covering today.

It is great to see the industry taking a strategic approach to its future and I would like to congratulate Building Research, the organising committee, and the sponsors – Site Safe New Zealand, the Construction Industry Council, and the Department of Building and Housing – for making possible an event that promotes this objective.

The themes of your conference reflect my own view of the issues the industry needs to place emphasis on, as we move forward. In particular, the focus on improving the way different parts of the industry work together aligns closely with the government’s own view of the way a revitalised regulatory structure for the industry should work.

The aim is to support business by making sure the regulatory environment fosters innovation and sustained economic growth, while at the same time providing the necessary safeguards to protect consumers and maintain standards.

Many of you will have heard of the work my colleague, Commerce Minister Lianne Dalziel, has been leading to ensure that our regulations match our needs in the most straightforward, manageable way possible. Regulation and regulatory frameworks play a critical role in shaping the business environment and so it is natural that we seek to remove barriers to economic growth and continuously improve the quality of regulations.

The work Lianne Dalziel has been leading is called the Quality Regulation Review. In plain English, what this means is a commonsense approach to looking at how we can make things better for business. We need a regulatory environment that promotes business confidence, globally competitive firms, social wellbeing and, as I said, economic growth.

As a former small business owner myself, I know the realities of the business world. It’s your money that you are risking every day, not someone else’s, and if you don’t work, you don’t eat.

I hugely admire the entrepreneurial men and women in this country who run their own companies, and know that they need the Government to provide an environment where businesses can prosper.

Just over a fortnight ago the Government announced the outcome of that review. It confirms that New Zealand’s regulatory environment is in good shape – which fits with the World Bank’s assessment of New Zealand as second in the world for ease of doing business. But there is room to improve the way rules and regulations are communicated to business as well as implemented and enforced.

The review found, not surprisingly, that when businesses or organisations - like yours - deal with government, they don’t see an OSH or an ACC or a Department of Building and Housing – they see “the government.” And, quite rightly, they don’t want to have to give “the government” the same information again and again.

Since the review started 15 months ago, there has already been substantial progress in reducing overlaps in regulations, in streamlining regulations, and also in minimising the potential impacts on business of new rules.

For example, one of my key initiatives as Minister of Statistics has been to reduce the respondent burden – or the amount of form filling – that businesses are required to do by law for official statistics. This is being achieved by removing duplication, and streamlining processes. But more can be done such as smarter use of administrative data and I am working towards these improvements.

Another key initiative has been to give some of the more expensive statistical products back to businesses for free, to help them grow their business. The uptake since I announced this initiative has been phenomenal, with millions of dollars worth of products given away so far.

The Quality Regulation Review has helped strengthen Government's internal processes. Since April all proposed regulatory interventions have been getting Regulatory Impact Analysis (RIA) scrutiny before they end up on a Minister’s desk for decision. RIA is the internationally accepted mechanism for ensuring proposed regulations are justified, cost-effective and do what they're supposed to.

Many more improvements for the regulatory framework are on the way. It is no surprise that a sector as important as building and construction has been identified as one where this commonsense approach will be of particular value, and I have been working with the Minister for the Environment and the Minister for Local Government on how we can make it easier for the construction industry to do business.

One of the really sensible ideas from business that has been picked up on involves closer co-ordination between the Resource Management Act and the Building Act.
The construction sector is telling us it wants territorial authorities to better integrate the functions and processes they carry out under the Resource Management Act, the Building Act and the Local Government Act so that there isn’t a piecemeal approach which chews time and adds costs.

Businesses have told us they want government to communicate better with their industry using their language, to focus on their issues and deal with their problems. They want all the bits of government – central and local – to be consistent.

And you can see what is driving this feedback. New Zealand’s buoyant economy has led to increased demand for resource and building consents at a time when labour and skills shortages are impacting on the ability of many territorial authorities to meet consumer service expectations.

Compounding this pressured situation is that councils often have to deal with poorly constructed applications, while also having to raise the quality standard of their own consenting processes if they want to stay in the business of processing consents – namely, if they want to become accredited Building Consent Authorities. We have taken this feedback on board and are working on a number of solutions.

A large number of initiatives are already underway within the Department of Building and Housing and the Ministry for the Environment that offer practical help and support to local authorities, and that will ultimately benefit end-users.

These include:
•Updated guidance material so applicants receive better, clearer information on consent application requirements.
•Support for building consent authorities to become accredited and registered. The government has provided a $3 million assistance package to help councils achieve accreditation.
•Support for training initiatives for Resource Management Act practitioners such as planners and lawyers, and for the development of a new national qualification for building officials that dovetails in with the future requirements of the Building Consent Authorities scheme

And more improvements are on the way. The Department of Building and Housing and the Ministry for the Environment are, for instance, producing a booklet which will explain how the two consent processes work together. This sounds like a small thing, but the sequencing of the two processes is often confusing for applicants even though, in practice, the application process is not as difficult as sometimes portrayed – if it is done properly.

Good quality regulation is necessary and with leaky homes, we have all seen what happens when we don't have regulations. A former short-sighted administration de-regulated the building industry in the 1990’s and allowed in a regime where anyone could put on a toolbelt and call themselves a builder, where councils could do "drive by" inspections and where designers could develop poor quality designs.

The regulatory reforms that are currently transforming the building and housing sector are being done to achieve positive social, environmental and economic outcomes. The sector is in transition. Provisions of the Building Act 2004 such as building consent authority accreditation and licensing, which aim to ensure that our buildings are designed, built and inspected right the first time, are being bedded in.

The Licensed Building Practitioner Scheme will provide a clear career pathway that will help attract and retain good people because they will get their skills, knowledge and experience formally recognised, in many cases for the first time.

It will also give consumers certainty, because for the first time there will be a public register where they know for sure they are getting a competent, professional builder. There will no place for cowboy operators in the new licensed environment.

Licensing will start this November, initially on a voluntary phase-in basis, with applications being taken from designers, builders, site supervisors, construction managers and carpenters. Next year, the opportunity to become licensed will be extended to external plasterers, roofers, bricklayers and blocklayers, and specialists in concrete structure, steel structure and building services.

The scheme hasn’t been developed by politicians in an ivory tower – quite the contrary. As Minister I am deeply appreciative of the strong and ongoing involvement with industry in developing the scheme – which, at the end of the day, has to work for those who actually design our buildings and swing the hammers.

The licensing scheme is just one of the measures being undertaken to raise standards and promote professional skills and behaviour in the building industry.

The new Building Consent Authority (BCA) accreditation scheme is about ensuring that building consents and inspections work is carried out efficiently and to a high standard. Local authorities carrying out this role will have to have the necessary systems and procedures in place, as well as enough staff.

The vast majority of authorities are well on their way to gaining accreditation. I am not going to pretend that getting accredited isn’t a challenge, particularly for those smaller rural councils, given the current high volume of building activity and the investment required. As I mentioned the government has been providing financial assistance as well as advisors to help councils improve their building consent systems.

Councils are showing a strong commitment to the process and the end result will be better quality consents, faster processing and quicker weeding out of poor quality consent applications. Councils will benefit from greater efficiency in their building control operations, increased capability and better risk management, while customers will enjoy better service and more consistent application of the Building Code.

It is encouraging to see several councils have recently put out media releases saying how their consenting processes are already seeing the benefits of these upgrades, in terms of faster turnarounds and a higher quality standard. And things are going to continue to improve.

Our regulatory environment also has to evolve to reflect our changing lifestyles, preferences and expectations of how we want to live. For example, some people do not want to live in the traditional Kiwi house, and instead prefer a lower maintenance townhouse where they don’t have to spend time on weekends mowing the lawn. Changes to the Unit Titles Act, for instance, will recognise that people are living more and more in apartment style living.

We are aiming for legislation that meets the needs of people building, developing, running and living in these complexes. We want an easy, flexible system where the rules are certain and suitable decisions can be easily made. We want to remove the concept where one person who doesn’t want to spend money on upgrades can stop 15 others investing in the common property. We want management to be done on a long-term basis so the money is carefully spent for the good of all.

This Bill is very near completion, and will be introduced into the House this year or early next.

Other regulatory reforms advance this Labour-led government’s belief that every New Zealander should have a good quality home that is warm, dry and healthy. That is why in May this year the Government announced major changes to the New Zealand Building Code and to building compliance documents that will result in the most significant improvements to the energy efficiency of buildings in 30 years.

From this November new houses in the South Island and the North Island’s Central Plateau will need more insulation and double-glazing. Improvements to house insulation in the North Island will take effect in most of the North Island in July 2008 and for Auckland and further north from October next year.

More efficient houses and buildings are a triple-win for New Zealanders’ health, our environment and the bottom line – reducing our gas and electricity bills.

These changes to the Building Code have come in ahead of the major review of the whole Code that is happening at moment. This is the first time in 16 years since the Code was introduced that a top-to-bottom review has occurred.

It is needed because not only have our expectations changed, but technology has also moved forward significantly since 1991. The Code defines the overall performance standards that buildings must meet, yet it also allows flexibility for innovation. Our building laws in New Zealand allow people to build their dream home.

The aim is not just to update the Code, but to squarely focus it so that it can provide the buildings we want for the 21st century. We also need the new Code to provide more clarity for designers about what they need to consider, more certainty for builders about how to meet the requirements, and more certainty for owners and building users regarding the quality of their buildings.

Sustainability is very much at the heart of what we are seeking to achieve as you will see from the proposals in the second Building Code review discussion document that was released last month.

One of its most interesting sections relates to the “embodied energy” of buildings.
Embodied energy is the total amount of energy used to produce a final product from raw materials.

Every building component, even the humble nail, has a carbon cost which, in a truly ‘green’ building, could be taken into account in an assessment of the building's overall energy efficiency.

The discussion document raises the idea of factoring into the design the greenhouse gas impact of producing the building’s components, as well as the building’s lifetime operating energy use, as a requirement of the New Zealand Building Code. This is big picture stuff, and no decisions will be made over whether we should go down this path until all the necessary in-depth analysis has been done.

Housing affordability, for example, is a key consideration, because it is no use having houses that Kiwis can't afford to buy. It is possible that embodied energy could even lower the cost of construction in New Zealand, given that manufactures would have an incentive to conserve energy and therefore reduce their production costs – which should have flow-on effects to consumers. Such a scheme would also encourage more recycling and using fewer materials more efficiently, which would minimise construction waste – all factors which could make houses cheaper to build. But as I said, it is early days.

The embodied energy concept is being studied and put into practice overseas, and New Zealand needs to be exploring these issues in-depth to ensure it is on the best possible path.

On that note, the people in the New Zealand building and construction industry – the engineers and architects, the designers and tradespeople – have a longstanding reputation for innovation and I am sure they won’t shirk from this challenge. So if you haven't already, I urge you to make a submission on the discussion document. We need the best minds to get involved in this crucial review of our Building Code. Submissions close in a week’s time on 28 September.

This Labour-led government believes New Zealand should aim to be the world's first truly sustainable nation. The way we design our buildings and homes will be central to that effort. It is also about recognising that this has to be done within an economic, social and environmental framework that is acceptable to our society

The people of New Zealand deserve to have confidence in the homes that they live in, that they pay for, and the buildings they use. They want to know that their homes and buildings are properly designed, built and inspected by people who are competent to do the job well. And ultimately they want those homes to be warm, dry and healthy, and ideally, cheap to run.

That is what optimising the regulatory environment is about.

I wish you well for the rest of your conference.